Eliza Wong
Gold’s Historic Rally Faces Critical Juncture as Prices Hit Records
Renowned Chinese economist Guan Qingyou (管清友), president of Rushi Financial Research Institute (如是金融研究院) and member of Phoenix ‘K-Shuo Alliance’ (凤凰K说联盟), has delivered a crucial assessment of gold’s meteoric rise during the Phoenix Bay Area Financial Forum 2025. His analysis suggests gold remains firmly entrenched in its third major bull market since the 1970s, yet current price levels present significant risks for new investors entering the market. This perspective comes as global investors increasingly seek safe-haven assets amid ongoing geopolitical tensions and economic uncertainty.
The gold market has demonstrated remarkable resilience throughout 2025, with prices consistently reaching new nominal highs. However, Guan’s warning that “buying now is standing guard” resonates deeply with institutional investors who recognize the dangers of entering markets at peak valuations. His commentary reflects a broader concern among financial experts about potential market overheating and the importance of strategic timing in commodity investments.
Executive Summary: Key Market Implications
- Gold remains in its third structural bull market since the 1970s, suggesting long-term upward momentum remains intact
- Current price levels represent potentially overextended valuations, creating entry risks for new investors
- Strategic patience and waiting for significant price corrections provide better risk-adjusted entry points
- Gradual position building during market pullbacks aligns with prudent portfolio management principles
- Global macroeconomic factors continue supporting gold’s long-term bullish thesis despite short-term valuation concerns
Historical Context: Understanding Gold’s Third Bull Market Cycle
Guan Qingyou’s reference to gold’s third bull market since the 1970s provides critical historical context for current market conditions. The first major bull market occurred during the 1970s, driven by high inflation, oil price shocks, and geopolitical uncertainty. This period saw gold prices surge from approximately $35 per ounce to over $800, representing one of the most dramatic commodity rallies in modern financial history.
The second major bull market unfolded between 2001 and 2011, fueled by loose monetary policy, the global financial crisis, and emerging market demand. Prices advanced from around $250 to over $1,900 per ounce, establishing new paradigms for gold valuation. The current third bull market, which began in the late 2010s, has been characterized by unprecedented monetary expansion, pandemic-related stimulus, and renewed institutional adoption.
Identifying Structural Bull Market Characteristics
True structural bull markets in gold typically share several defining characteristics that differentiate them from shorter-term rallies. These include sustained fundamental drivers, broadening investor participation, and increasing institutional allocation. The current environment exhibits all these traits, with central bank buying, inflationary concerns, and currency debasement fears providing strong underlying support.
According to World Gold Council data, central banks purchased a record 1,136 tonnes of gold in 2024, continuing a multi-year trend of institutional accumulation. This institutional demand creates a solid foundation for the ongoing bull market, suggesting that any significant price corrections may represent buying opportunities rather than trend reversals.
Current Market Dynamics: Why Prices Remain Elevated
The gold market in 2025 continues to benefit from multiple supportive factors that have propelled prices to record levels. Monetary policy uncertainty, particularly regarding the timing and pace of interest rate adjustments by major central banks, has maintained gold’s appeal as a non-yielding asset that preserves capital during periods of financial market stress.
Geopolitical tensions, including ongoing trade disputes and regional conflicts, have further enhanced gold’s safe-haven status. Institutional investors, particularly pension funds and sovereign wealth funds, have increased their strategic allocations to gold as a portfolio diversifier and inflation hedge. These factors collectively contribute to the sustainability of the current third bull market in gold.
Valuation Concerns at Current Levels
Despite the strong fundamental backdrop, Guan Qingyou’s warning about “standing guard” reflects legitimate concerns about current valuation levels. Gold’s rapid appreciation throughout early 2025 has created technically overbought conditions that typically precede consolidation periods. Historical analysis suggests that entries during such exuberant phases often lead to suboptimal risk-adjusted returns.
The gold-to-S&P 500 ratio, a key metric for assessing relative valuation, currently favors equities despite recent gold strength. This indicates that while gold may maintain its long-term upward trajectory, short-term momentum might be excessive. Professional investors typically prefer establishing positions during periods of market pessimism rather than enthusiasm.
Investment Strategy: Patience Over Impulse
Guan Qingyou’s recommendation for investors to maintain patience and wait for significant price declines before establishing positions reflects sophisticated investment thinking. History demonstrates that the most successful commodity investments often involve buying during periods of market distress rather than chasing performance during rallies.
The concept of “standing guard” at peak prices particularly resonates with Chinese investors who have experienced multiple boom-bust cycles across various asset classes. This cultural understanding of market cycles informs more disciplined investment behavior, emphasizing the importance of entry timing rather than mere asset selection.
Implementing a Gradual Accumulation Strategy
For investors considering gold exposure, implementing a systematic accumulation strategy during price weakness represents the most prudent approach. Dollar-cost averaging during market corrections allows investors to build positions at progressively better valuations while avoiding the psychological pressure of timing absolute market bottoms.
Professional money managers typically allocate 5-10% of portfolios to gold and other precious metals, rebalancing periodically to maintain target allocations. This disciplined approach ensures investors are neither overexposed during market peaks nor underexposed during potential breakout phases. The current third bull market in gold warrants such strategic positioning rather than tactical speculation.
Macroeconomic Backdrop: Supporting Factors for Gold
The global macroeconomic environment continues to provide substantial support for gold’s long-term bullish thesis. Persistent inflation concerns, despite central banks’ efforts to contain price pressures, maintain gold’s relevance as an inflation hedge. Real interest rates, a key determinant of gold prices, remain negative in many developed markets, enhancing gold’s appeal relative to yield-bearing assets.
Currency depreciation concerns, particularly regarding the U.S. dollar’s long-term reserve status, have driven increased diversification into gold by international investors. The expansion of digital gold products and blockchain-based gold tokens has democratized access to gold investments, broadening the investor base supporting this third bull market.
Central Bank Policies and Gold Demand
Central bank policies continue to significantly influence gold market dynamics. The People’s Bank of China (中国人民银行) has consistently added to its gold reserves, reflecting a strategic shift toward asset diversification. Other emerging market central banks have followed similar paths, creating structural demand that underpins gold prices.
The Federal Reserve’s monetary policy trajectory remains particularly crucial for gold investors. Historical patterns suggest that the transition from tightening to easing cycles typically benefits gold prices, as reduced opportunity costs and potential dollar weakness enhance gold’s attractiveness. This policy pivot potential adds another dimension to gold’s investment case within the ongoing third bull market.
Risk Assessment: Navigating Market Uncertainties
While the third bull market thesis remains intact, investors must acknowledge several potential risks that could impact gold prices. Unexpected hawkish monetary policy shifts by major central banks could strengthen currencies and increase opportunity costs for holding gold. Improved geopolitical relations or resolution of ongoing conflicts might reduce safe-haven demand temporarily.
Technological advancements in mining or extraction methods could potentially increase gold supply, though such developments typically unfold over extended periods. Most importantly, excessive speculative positioning could create short-term vulnerability, particularly if leveraged investors need to unwind positions rapidly during market stress.
Balancing Opportunity and Risk in Current Environment
Successful navigation of the current gold market requires careful balancing of long-term opportunity against short-term risks. Guan Qingyou’s caution against immediate investment reflects this balanced perspective, recognizing both the structural bull market characteristics and the temporary valuation excesses.
Investors should consider gold’s role within broader portfolio construction rather than as a standalone speculation. The metal’s historical negative correlation with risk assets during market stress events justifies its inclusion in diversified portfolios, regardless of short-term price movements within this third bull market phase.
Strategic Outlook: Positioning for the Long Term
The third bull market in gold appears to have substantial runway remaining based on historical patterns and current fundamental drivers. However, intelligent investing involves not just recognizing long-term trends but also executing entry strategies that maximize risk-adjusted returns. Guan Qingyou’s advice to wait for significant declines before establishing positions aligns with this sophisticated approach.
Investors should view potential price corrections not as threats but as opportunities to build exposure at more attractive levels. The structural case for gold remains compelling, with monetary expansion, geopolitical uncertainty, and institutional adoption creating durable demand foundations. This third bull market likely has years rather than months remaining in its cycle.
Actionable Guidance for Professional Investors
For institutional investors and fund managers, the current environment demands disciplined strategy implementation rather than emotional decision-making. Establishing predefined entry points based on technical support levels or valuation metrics can help avoid the temptation to chase performance at market peaks.
Diversification across gold investment vehicles—including physical bullion, mining equities, and exchange-traded funds—can provide different risk-return characteristics while maintaining exposure to the broader third bull market thesis. Regular portfolio rebalancing ensures maintained target allocations without emotional overweighting during periods of market enthusiasm.
Synthesizing Market Intelligence for Informed Decisions
Guan Qingyou’s perspective offers valuable insight into current gold market dynamics, balancing recognition of the ongoing third bull market with appropriate caution about immediate entry timing. His analogy of “standing guard” at peak prices vividly captures the risk of investing during periods of market exuberance.
The fundamental case for gold remains strong, supported by macroeconomic conditions, institutional demand, and geopolitical factors. However, successful investment implementation requires patience, discipline, and strategic entry planning. Investors should prepare watchlists, identify target entry levels, and maintain liquidity to capitalize on inevitable market fluctuations.
Professional market participants should continue monitoring central bank policies, inflation data, and technical indicators for optimal positioning within this third bull market. The long-term trajectory appears favorable, but short-term patience may yield substantially improved risk-adjusted returns. As with all investment decisions, consulting with qualified financial advisors remains essential for developing strategies appropriate for individual risk profiles and investment objectives.
